Recovery of overpayment after long period without misrepresentation is arbitrary and illegal.

The applicant, Sh. A. S. Rawat, retired on April 30, 2019, as an Assistant, with a last drawn basic pay of Rs. 47,600/-

Prior to his retirement, he completed all pension formalities, with no disciplinary or vigilance proceedings pending against him

Despite this, the respondents failed to release his pensionary benefits

The applicant then filed OA No. 1046 of 2019, which directed the respondents to release benefits or issue a reasoned order within 15 days, also stipulating interest liability for delayed payments

After a representation by the applicant, a Gratuity of Rs. 8,53,776/- was sanctioned, but only Rs. 6,90,143/- was released

The applicant discovered his basic pay had been erroneously taken as Rs. 46,200/- instead of Rs. 47,600/-, leading to reduced computations of various benefits

Respondent No. 3 advised him to approach Respondent No. 4, who then issued a letter dated December 12, 2019, without justifying the pay reduction or the recovery of Rs. 1,63,633/- from his retiral dues

The respondents claimed the dispute arose from an incorrect pay fixation during the 6th Central Pay Commission implementation by the applicant's parent department, the Office of the Development Commissioner (Handicrafts)

They asserted that the applicant's pay was wrongly fixed at Rs. 8,510/- plus Grade Pay Rs. 2,400/- (Total Rs. 10,910/-) on January 1, 2006, when it should have been Rs. 8,190/- plus Grade Pay Rs. 2,400/- (Total Rs. 10,590/-)

Subsequent re-fixation in 2019 resulted in his last drawn pay being Rs. 46,200/- instead of Rs. 47,600/-, leading to the recovery of Rs. 1,63,633/- as overdrawn salary

The respondents also cited undertakings from the applicant to refund any excess payment and contended the applicant delayed submitting pension papers

Whether the respondents' action of reducing the applicant's last drawn basic pay from Rs. 47,600/- to Rs. 46,200/- and recovering Rs. 1,63,633/- from his retiral dues at the verge of retirement, for an alleged pay fixation error from 2006/2008, is legal and justified.

The Tribunal primarily applied the precedent set by the Hon’ble Supreme Court in Jagdish Prasad Singh v. State of Bihar and others 2024 AIR SC 3950.

This ruling establishes that when excess payment occurs due to an employer's error, and the employee is not guilty of misrepresentation or fraud, reducing the pay scale and recovering money after a long period (e.g., 13 years) from a government employee constitutes a punitive action with drastic consequences.

Such action is deemed arbitrary, illegal, and violative of natural justice principles if taken without affording the employee a hearing.

The court also referred to its previous order in OA No. 1046 of 2019 regarding interest on delayed retiral benefits.

Furthermore, the applicant relied on instructions dated March 2, 2016 (Annexure A-8), which suggest that recovery of alleged excess payments for periods beyond five years is impermissible.

The principles of natural justice, requiring an opportunity of hearing, were also invoked.

The Tribunal found that the alleged incorrect pay fixation dated back to 2006/2008, and the applicant had drawn the higher pay for over 13 years without objection from the department.

The discrepancy was only raised immediately before his retirement in April 2019, when his pension papers were being processed.

The court noted that there was no evidence of the applicant misrepresenting facts or being involved in the alleged wrong fixation of pay, which was carried out by the respondents' own competent authority.

Applying the Supreme Court's principle from Jagdish Prasad Singh v. State of Bihar, the Tribunal concluded that unsettling a long-standing pay position and effecting recovery at the fag end of an employee's service, without fault on the employee's part, is arbitrary, inequitable, and constitutes a punitive action.

The action was also deemed violative of natural justice as no opportunity of hearing was afforded to the applicant.

The respondents' reliance on undertakings for refund was insufficient to justify retrospective recovery after such a long period, especially when the error was the department's and not due to fraud or misrepresentation by the employee.

The impugned action of the respondents in reducing the applicant's pay from Rs. 47,600/- to Rs. 46,200/- and recovering Rs. 1,63,633/- from his retiral dues is quashed and set aside.

The respondents are directed to restore the applicant's pay to its pre-reduction level and re-fix his pensionary benefits accordingly.

They must also refund the recovered amount of Rs. 1,63,633/- within two months from the date of the order.

If the amount is not refunded within the stipulated period, it shall carry interest at the GPF rate from the date of recovery until actual payment.